Federal Register, Volume 78 Issue 13 (Friday, January 18, 2013)

[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Rules and Regulations]
[Pages 4057-4060]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01070]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 28, 30, and 180

[Docket No. FR-5662-F-01]
RIN 2501-AD59

Inflation Adjustment of Civil Money Penalty Amounts

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule amends HUD's civil money penalty and civil
penalty regulations by making inflation adjustments that are required
by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28
U.S.C. 2461 note) (FCPIA Act). The FCPIA Act mandates the adjustments
and the formula used to calculate them. Also in this final rule, HUD is
taking the opportunity to update an outdated cross-reference in its
civil money penalty regulations.

DATES: Effective Date: February 19, 2013.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Associate General
Counsel, Office of Program Enforcement, Department of Housing and Urban
Development, 1250 Maryland Avenue SW., Suite 200, Washington, DC 20024;
telephone number 202-245-4141 (this is not a toll-free number).
Hearing- or speech-impaired individuals may access this number via TTY
by calling the toll-free Federal Information Relay Service at 800-877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background

The Federal Civil Penalties Inflation Adjustment Act of 1990 (28
U.S.C. 2461 note) (FCPIA Act), as amended by the Debt Collection
Improvement Act of 1996 (31 U.S.C. 3701) (DCIA), requires each federal
agency to make inflation adjustments to its maximum civil money
penalties and civil penalties. The formula for determining the specific
adjustment of such penalties for inflation is nondiscretionary and is
determined by section 5 of the FCPIA Act. The adjustment is based on
the change in the cost-of-living increase, which is defined in the
statute as based on the percentage change, if any, in the Consumer
Price Index (CPI). The statute also states specific rules for rounding
off, first-time adjustments and provides that adjusted civil money
penalties and civil penalties can only be applied prospectively; that
is, only to violations that occur after the date that the increase
takes effect.

II. This Final Rule

A. Inflation Adjustment of Civil Money Penalty and Civil Penalty
Amounts

The changes made by this final rule increase the amount of civil
money penalties, consistent with statutory authority for 24 CFR parts
28 and 30 and civil penalties consistent with 24 CFR part 180.
Additionally, no amendment is necessary to civil money penalties and
civil penalties found in some HUD regulations (e.g., 24 CFR parts
30.20, 30.25, and 180.671(a)(1)) because application of the statute's

[[Page 4058]]

formula would not result in an increase to the penalty.
Applying the statutory formula to determine the amount of the
adjustment is a four-step process. The first step entails determining
the inflation adjustment factor. This is done by calculating the
percentage increase by which the CPI for all urban consumers (CPI-U)
for the month of June of the calendar year preceding the adjustment
(i.e., June 2012) exceeds the CPI-U for the month of June of the
calendar year in which the amount of such civil monetary penalty was
last set or adjusted. CPI-U values are available at a Department of
Labor, Bureau of Labor Statistics file transfer protocol site, ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt. Once the inflation
adjustment factor is determined, the second step is to calculate the
inflation increase. That is done by multiplying the inflation
adjustment factor by the current civil penalty amount. The third step
is to round off the inflation increase according to Section 5(a) of the
FCPIA Act, as amended by the DCIA. The FCPIA Act provides for a
``rounding-off,'' using multiples from $10 to $25,000, of the increase
calculated based on the change in the CPI. See 28 U.S.C. 2461(5)(a).
Once the inflation increase has been rounded, the last step is to add
the rounded inflation increase to the current civil penalty amount, to
obtain the new inflation-adjusted civil penalty amount. Consequently,
in those instances in which the increased dollar amount is determined
to be less than the applicable multiple, the existing penalty is
unchanged. The first time the civil penalty amount is adjusted, the
FCPIA Act limits any increase of the civil penalty to no more than 10
percent.
In Sec. 28.10, the maximum penalties for making a false claim or
written statement, as described in the regulation, is increased from
$7,500 to $8,500.
In Sec. 30.35(c)(1), the maximum penalties that the Mortgagee
Review Board may impose for a series of violations identified in the
regulations are increased from $7,500 to $8,500 per violation, and from
$1,375,000 to $1,525,000 for all violations committed during any one-
year period.
In Sec. 30.36(c), the maximum penalty that HUD may impose upon
participants in Federal Housing Administration (FHA) programs for
violations identified in the regulation is increased from $6,050 to
$7,050, and from $1,210,000 to a maximum of $1,335,000 for all
violations committed during any one-year period.
In Sec. 30.40(c), the maximum penalty that HUD may impose upon a
mortgagee or a holder of a guarantee certificate that violates the
statutory provisions concerning loan guarantees for Indian housing is
increased from $7,000 to $8,000 per violation, and from $1,375,000 to a
maximum of $1,525,000 for all violations committed during any one-year
period.
In Sec. 30.45(g), the maximum penalty that may be imposed upon a
mortgagor of a multifamily property or upon any person in a
relationship with the mortgagor, as described in the regulations, is
increased from $37,500 to $42,500 per violation.
In Sec. 30.50(c), the maximum penalty that may be imposed against
a Government National Mortgage Association (GNMA) issuer or custodian
for a violation of any provision of 12 U.S.C. 1723i(b) or other
authorities cited in the regulations is increased from $7,500 to $8,500
per violation, and from $1,375,000 to $1,525,000 for all violations
committed during any one-year period.
In Sec. 30.60(c), the maximum penalty that HUD may impose upon any
dealer or sponsored third-party originator for, among other things,
falsifying statements or making false representations in violation of
section 2(b)(7) of the National Housing Act (12 U.S.C. 1703(b)(7)) is
increased from $7,500 to $8,500 for each violation, and from $1,375,000
to a maximum of $1,525,000 during any one-year period.
In Sec. 30.68(c), the maximum penalty that may be imposed against
any owner, any general partner of a partnership owner, or any agent, as
described in the regulation, that provides a knowing and material
breach of a housing assistance payments contract, is increased from
$25,000 to $27,500 per violation.
In Sec. 180.671(a)(2) and (3), the maximum penalties that the
Administrative Law Judge may impose upon a respondent who is found to
have engaged in a discriminatory housing practice is increased from
$37,500 to $42,500, and from $65,000 to $70,000, respectively. The
maximum penalty of $16,000 at Sec. 180.671(a)(1) does not increase
under the formula.

B. Correction to 24 CFR 30.90

On December 17, 2008, HUD published a final rule (73 FR 76832) to
amend its regulations governing hearing procedures for administrative
sanction hearings pursuant to 2 CFR part 2424 and with respect to
determinations by the Multifamily Participation Review Committee
pursuant to 24 CFR part 200, subpart H. The final rule replaced and
reorganized Part 26. As a result, the cross-references to Part 26 in
Sec. 30.90 are outdated. This final rule takes the opportunity to
correct that by updating the cross-references in Sec. 30.90(c).

III. Justification for Final Rulemaking

In general, HUD publishes a rule for public comment before issuing
a rule for effect, in accordance with HUD's regulations on rulemaking
at 24 CFR part 10. Part 10, however, provides in Sec. 10.1 for
exceptions from that general rule where HUD finds good cause to omit
advance notice and public participation. The good cause requirement is
satisfied when the prior public procedure is ``impracticable,
unnecessary or contrary to the public interest.''
HUD finds that good cause exists to publish this rule for effect
without first soliciting public comment because prior public comment is
unnecessary. This final rule merely follows the statutory directive in
the FCPIA Act allowing for periodic increases in HUD's civil money
penalties and civil penalties by applying the adjustment formula
established in the statute. Accordingly, because calculation of the
increases is formula-driven, HUD has no discretion in updating its
regulations to reflect the maximum allowable penalties derived from
application of the formula. HUD emphasizes that this rule addresses
only the matter of the calculation of the maximum civil money penalties
or civil penalties for the respective violations described in the
regulations. This rule does not address the issue of the Secretary's
discretion to impose or not to impose a penalty, nor the procedures
that HUD must follow in initiating a civil money penalty action, or in
seeking a civil penalty in a Fair Housing Act case.

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if the
regulation is necessary, to select the regulatory approach that
maximizes net benefits. As discussed above in this preamble, this final
rule updates an incorrect cross reference and revises the civil money
penalty and civil penalty regulations to make inflation adjustments
required by the FCPIA Act. As a result, this rule was determined to be
not a significant regulatory action under section 3(f) of Executive
Order 12866, Regulatory Planning and Review, and therefore was not
reviewed by the Office of Management and Budget (OMB).

[[Page 4059]]

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 605(b)) generally requires
an agency to conduct regulatory flexibility analysis of any rule
subject to notice and comment rulemaking requirements, unless the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. This final rule has
no economic impact on entities that are in compliance with relevant
laws and HUD regulations. This final rule does not establish special
procedures that would need to be complied with by small entities. All
entities, small or large, could be subject to the same penalties as
established by statute and implemented by this rule, but only if they
violate a relevant statute or regulation and become subject to civil
money penalties or civil penalties. Accordingly, the undersigned
certifies that this final rule would not have a significant economic
impact on a substantial number of small entities.

Executive Order 13132, Federalism

Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This final rule will not have
federalism implications and would not impose substantial direct
compliance costs on state and local governments or preempt state law
within the meaning of the Executive Order.

Environmental Review

This rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern, or regulate, real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule
is categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments, and the private sector. This rule does not impose
any federal mandates on any state, local, or tribal government, or the
private sector within the meaning of UMRA.

List of Subjects

24 CFR Part 28

Administrative practice and procedure, Claims, Fraud, Penalties.

24 CFR Part 30

Administrative practice and procedure, Grant programs--housing and
community development, Loan programs--housing and community
development, Mortgages, Penalties.

24 CFR Part 180

Administrative practice and procedure, Aged, Civil rights, Fair
housing, Individuals with disabilities, Investigations, Mortgages,
Penalties, Reporting and recordkeeping requirements.

Accordingly, for the reasons described in the preamble, HUD amends
24 CFR parts 28, 30, and 180 to read as follows:

PART 28--IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF
1986

0
1. The authority citation for part 28 is revised to read as follows:

Authority: 28 U.S.C. 2461 note; 31 U.S.C. 3801-3812; 42 U.S.C.
3535(d).

0
2. Revise Sec. 28.10 (a)(1) introductory text and (b)(1) introductory
text to read as follows:

Sec. 28.10 Basis for civil penalties and assessments.

(a) Claims. (1) A civil penalty of not more than $8,500 may be
imposed upon a person who makes a claim that the person knows or has
reason to know:
* * * * *
(b) Statements. (1) A civil penalty of up to $8,500 may be imposed
upon a person who makes a written statement that:
* * * * *

PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT

0
3. The authority citation for part 30 continues to read as follows:

Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, 1735f-15;
15 U.S.C. 1717a; 28 U.S.C. 2461 note; 42 U.S.C. 1437z-1 and 3535(d).

0
4. Revise Sec. 30.35(c)(1) to read as follows:

Sec. 30.35 Mortgagees and lenders.

* * * * *
(c)(1) Amount of penalty. The maximum penalty is $8,500 for each
violation, up to a limit of $1,525,000 for all violations committed
during any one-year period. Each violation shall constitute a separate
violation as to each mortgage or loan application.
* * * * *

0
5. Revise Sec. 30.36(c) to read as follows:

Sec. 30.36 Other participants in FHA programs.

* * * * *
(c) Amount of penalty. The maximum penalty is $7,050 for each
violation, up to a limit of $1,335,000 for all violations committed
during any one-year period. Each violation shall constitute a separate
violation as to each mortgage or loan application.

0
6. Revise Sec. 30.40(c) to read as follows:

Sec. 30.40 Loan guarantees for Indian housing.

* * * * *
(c) Amount of penalty. The maximum penalty is $8,000 for each
violation, up to a limit of $1,525,000 for all violations committed
during any one-year period. Each violation shall constitute a separate
violation as to each mortgage or loan application.

0
7. Revise Sec. 30.45(g) to read as follows:

Sec. 30.45 Multifamily and Section 202 or 811 mortgagors.

* * * * *
(g) Maximum penalty. The maximum penalty for each violation under
paragraphs (c) and (f) of this section is $42,500.
* * * * *

0
8. Revise Sec. 30.50(c) to read as follows:

Sec. 30.50 GNMA issuers and custodians.

* * * * *
(c) Amount of penalty. The maximum penalty is $8,500 for each
violation, up to a limit of $1,525,000 during any one-year period. Each
violation shall constitute a separate violation with respect to each
pool of mortgages.

0
9. Revise Sec. 30.60(c) to read as follows:

Sec. 30.60 Dealers or sponsored third-party originators.

* * * * *
(c) Amount of penalty. The maximum penalty is $8,500 for each
violation, up to a limit for any particular person of $1,525,000 during
any one-year period.

0
10. Revise Sec. 30.68(c) to read as follows:

Sec. 30.68 Section 8 owners.

* * * * *

[[Page 4060]]

0
11. Revise Sec. 30.90(c) to read as follows:

Sec. 30.90 Response to the complaint.

* * * * *
(c) Filing with the administrative law judges. HUD shall file the
complaint and response with the Docket Clerk, Office of Administrative
Law Judges, in accordance with Sec. 26.38 of this chapter. If no
response is submitted, then HUD may file a motion for default judgment,
together with a copy of the complaint, in accordance with Sec. 26.41
of this title.

PART 180--CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS
MATTERS

0
12. The authority citation for part 180 continues to read as follows:

Authority: 29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-
3619, 5301-5320, and 6103.

0
13. Revise Sec. 180.671 (a)(2) and (3) to read as follows:

Sec. 180.671 Assessing civil penalties for Fair Housing Act cases.

(a) * * *
(2) $42,500, if the respondent has been adjudged in any
administrative hearing or civil action permitted under the Fair Housing
Act, or under any state or local fair housing law, or in any licensing
or regulatory proceeding conducted by a federal, state, or local
government agency, to have committed one other discriminatory housing
practice and the adjudication was made during the 5-year period
preceding the date of filing of the charge.
(3) $70,000, if the respondent has been adjudged in any
administrative hearings or civil actions permitted under the Fair
Housing Act, or under any state or local fair housing law, or in any
licensing or regulatory proceeding conducted by a federal, state, or
local government agency, to have committed two or more discriminatory
housing practices and the adjudications were made during the 7-year
period preceding the date of filing of the charge.
* * * * *

Dated: January 8, 2013.
Shaun Donovan,
Secretary.
[FR Doc. 2013-01070 Filed 1-17-13; 8:45 am]
BILLING CODE 4210-67-P